Peer-to-Peer lending is everywhere these days. You can start a business, get student loans and consolidate high interest debt. Still, borrowing money from your peers is a new experience for most of us, and for many people new things are daunting -- which makes this borrower's look at peer-to peer-lending by Matt Jabs at Debt Free Adventure all incredibly useful.
After the interest on three of his credit cards jumped, "due to bad economy", he looked into LendingClub.com to consolidate his high-interest debt into a lower fixed-term loan. But he didn't just consider the interest rates and say to himself, hmm, I'll chase that lower rate and who cares about the fees! Instead he compared the total cost and by doing so saved himself over $500. His story covers the details of his process, including his interest rate savings, 10% on one card. You'll also find links to help you figure out if you can save by consolidating to a lower rate loan the same way he did.
For me one of the biggest benefits to switching to a Lending Club peer-to peer-loan which was not covered in Jabs' article is that it is a fixed-length loan. While credit card debt can drag out year after year, a Lending Club loan gives you a specific payoff date. Having an end in sight can be a huge motivator to tackling your debt. I also like that you can't add to this debt over time and that there is no prepayment penalty.
While I have not personally used Lending Club or a peer-to-peer lender, this type of information,is leading me to look at a peer-to-peer solution to consolidate my current credit card debt when my promotional 0% rate expires.
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Monday, September 28, 2009
Tuesday, September 15, 2009
Student loans puts college graduate into deep financial hole
Student loans were a fact of life for Marjorie Dillon and she was OK with that — even though she didn't keep close track of how much she borrowed or completely understand the agreements. She and many of her former classmates at Robert Morris University in Moon relied on loans to pay tuition and expenses.
Ms. Dillon, 26, of Coraopolis, was the first in her family to attend a four-year university and loans were the only way to finance the business administration degree that would be her passport to a better life.
But six months after graduating with her bachelor's degree, Ms. Dillon is making $7.25 an hour plus tips serving beer at a bowling alley, working 25 to 30 hours a week. She's nearly $120,000 in debt, behind on her bills and, despite her best efforts, cannot find a better job. Her 80-year-old grandmother co-signed for the loans and could lose her house in North Fayette if the debts are not repaid.
"Honestly, I wouldn't have gone to school if I knew I would be in debt the rest of my life," Ms. Dillon said. "I won't be able to ever own anything. If you look at my credit report, it's (loaded) with Sallie Mae loans."
The financial crisis she is facing provides a snapshot of the worrisome outlook confronting many college graduates who find themselves juggling a mountain of student loans and other forms of debt in the early stages of their working lives.
Her case might be considered a worst-case scenario. The average cumulative debt for four-year college graduates has reached $22,656, according to Finaid.org, a leading Web site for financial aid information.
Some relief is on the way thanks to a new federal student loan repayment plan that will set monthly payments based on how much borrowers make and the size of their families instead of how much they owe. In some cases, graduates will make no monthly payments if their income falls below a certain level. And after 25 years of payments, any remaining balance is cancelled.
But the reduced income repayment program is only available for federal student loans under Stafford, Grad Plus and federal consolidated loan programs.
Source
Ms. Dillon, 26, of Coraopolis, was the first in her family to attend a four-year university and loans were the only way to finance the business administration degree that would be her passport to a better life.
But six months after graduating with her bachelor's degree, Ms. Dillon is making $7.25 an hour plus tips serving beer at a bowling alley, working 25 to 30 hours a week. She's nearly $120,000 in debt, behind on her bills and, despite her best efforts, cannot find a better job. Her 80-year-old grandmother co-signed for the loans and could lose her house in North Fayette if the debts are not repaid.
"Honestly, I wouldn't have gone to school if I knew I would be in debt the rest of my life," Ms. Dillon said. "I won't be able to ever own anything. If you look at my credit report, it's (loaded) with Sallie Mae loans."
The financial crisis she is facing provides a snapshot of the worrisome outlook confronting many college graduates who find themselves juggling a mountain of student loans and other forms of debt in the early stages of their working lives.
Her case might be considered a worst-case scenario. The average cumulative debt for four-year college graduates has reached $22,656, according to Finaid.org, a leading Web site for financial aid information.
Some relief is on the way thanks to a new federal student loan repayment plan that will set monthly payments based on how much borrowers make and the size of their families instead of how much they owe. In some cases, graduates will make no monthly payments if their income falls below a certain level. And after 25 years of payments, any remaining balance is cancelled.
But the reduced income repayment program is only available for federal student loans under Stafford, Grad Plus and federal consolidated loan programs.
Source
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